University Global Business Expansion and Market Analysis Report

This report provides a comprehensive analysis of global business strategies, focusing on market entry and expansion. It begins by evaluating two countries (A and B) as potential markets for an automobile company, considering macroeconomic variables such as GDP, per capita income, poverty rates, and urbanization to determine the best export destination. The report then examines a petrochemical company's crude oil import options, comparing the economic structures and import needs of the two countries. Finally, the report explores the selection of a location for Foreign Direct Investment (FDI), considering factors like economic stability, skilled labor availability, and unemployment rates. The report also discusses the advantages and disadvantages of different foreign market entry modes, specifically focusing on international joint ventures, including risk sharing, access to resources, and potential conflicts. The report concludes with a timeline graph and references relevant literature supporting the analysis.

Running Head: GLOBAL BUSIINESS ASSIGNMENT
Global Busiiness Assignment
Name of the Student
Name of the University
Author note

1GLOBAL BUSIINESS ASSIGNMENT
Table of Contents
Task A........................................................................................................................................2
Task B........................................................................................................................................4
Timeline graph.......................................................................................................................4
Task C........................................................................................................................................5
Foreign market entry mode- international joint venture........................................................5
References..................................................................................................................................7

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Task A
1. Consider an automobile company that also produces automotive parts and thinks of
expanding business in a new market. One easy way of business expansion is to gain access to
a new market through export. Now, both the country A and B import automobile or
automotive cars. In order to choose export destination, a number of macro variables needs to
be considered. Gross Domestic Product of is the measure of overall productivity a nation
(Uribe & Schmitt-Grohé, 2017). GDP of country A is US $ 2.081 trillion. The GDP for
country B on the other hand is US $ 216 billion. The per capita income is also higher in
country A than that in country B. The country A has an average income (GDP per capita,
PPP) is US $ 15,000 and that is country B is US $ 6,900. Most of the population in country A
is live above the poverty line. Only 3.7% people in country A is living below the poverty line.
However, this statistic for country B is 11.3%. Country A is highly urbanized with 86.2%
people resides in urban. The share of urban population in country B is only 34.9%. All these
suggest as an export market of Automobiles Country A is in a better position than country B.
2. Consider the situation of a petrochemical company that refines petroleum oil and engages
in production of petroleum products. Crude oil is one primary resource needed for this
business. To supplement domestic supply, however the business need some source of import
of crude oil. Country B’s one of the major export is crude oil. This implies the country has
abundant supply of crude oil. However, the country is not much developed as country A.
This is reflected from the percentage share of employment in three major sectors of the
economy. In country A, the share of agricultural employment is 10%, industrial employment
is 39.8% and service sector employment is 50.2%. The corresponding shares for country B
are 48%, 21% and 31% respectively. The share clearly shows country B is an agriculture
dependent nation. Because of lack of industrial development the demand of crude oil in
country B is greater than that is country A. Petroleum products belong to the major

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importable of country B. Therefore, country B has appeared to be a better source of importing
crude oil for the business.
3. The last conclusion that can be drawn looking at the socio economic data for the two
countries is the decision regarding choice of location for Foreign Direct Investment (FDI).
Suppose, a company is deciding to expand business of producing transport equipment in
some foreign market. FDI is one direct mode of entering in foreign market. The factors that
needs to be considered while selecting FDI location include economic and political stability,
geographic location, availability of skilled laborers, market size, operation cost and other
(Lien & Filatotchev, 2015). GDP and per capital GDP are two important indicators of
economic stability. In terms of both indicators, country A is in a more stable state than
country B. The adult literacy rate though slightly higher in country B (94.7%) than country A
(92.6%) but the industrial and service sector is more developed in country A as compared to
country B. This attracts FDI in country A. The rate of unemployment in country A is 13.1
percent while than in country B is 2.3%. The foreign direct investment creates more job
opportunities in the nation. Therefore, government in country A might provide tax concession
or other incentives to the entering business firm.
Task B
Timeline graph
United Kingdom

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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
GDP( percentage change)
GDP( percentage change)

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China
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
GDP( percentage change)
GDP( percentage change)
Task C
Foreign market entry mode- international joint venture
The beneficial effect of entering in a foreign market depends on the mode of entering
in the market. The four common channel of entering in a foreign market exporting,
Licensing, Joint venture and direct investment. In Joint venture, two business firms located in
two or more nation enter in a mutually beneficial partnership. The five common objectives of
such a partnership include enter in a new market, share of risk between partners, share of
technological knowledge, development of joint product and confront government regulation
(Wong et al., 2018). The key aspects to be considered in a joint venture are control,
ownership, length of agreement, pricing strategy, technology transfer, capabilities and
resources of local firms and intention of government.
A wholly owned subsidiary on the other hand makes independent operation as a
parent company. Here, the entering firm has its own structure of management, clients’ base
and products. The main advantage of international joint venture is the risk sharing among the
partners. Entering in a new market involves different kind of market risks. In the wholly

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owned subsidiary, such risks had to borne by the single company (Yan & Luo, 2016). In joint
venture, however the risk is shared among the partnered firms. When one business fails then
the resulting losses are shared between companies. Joint venture also minimizes risk by
providing a greater access to local resources and capital to the newly entered firm.
However, there are some potential risk or disadvantage in a joint venture. As like
risks, profits are also shared between companies. Therefore, in a joint venture firm receives a
lower profit as compared to a wholly owned subsidiary company (Wong et al., 2018).
Problem may occur in a joint venture in case of interest of partner contradicts.

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References
Lien, Y. C., & Filatotchev, I. (2015). Ownership characteristics as determinants of FDI
location decisions in emerging economies. Journal of World Business, 50(4), 637-
650.
Uribe, M., & Schmitt-Grohé, S. (2017). Open economy macroeconomics. Princeton
University Press.
Wong, A., Wei, L., Wang, X., & Tjosvold, D. (2018). Collectivist values for constructive
conflict management in international joint venture effectiveness. International
Journal of Conflict Management, 29(1), 126-143.
Yan, A., & Luo, Y. (2016). International joint ventures: Theory and practice. Routledge.